The Problem: For over 90 years, a family owned and operated food business followed the same established operating procedures. After the business was sold, the new owners decided to make changes to the operation. Employees that had worked there for years had a hard time adjusting to these changes and did not understand how to help the new company increase profit and cash flow (metrics to which employee performance bonuses were now tied). We were brought in to teach these employees basic finance and business concepts to help them understand how their business was changing and help them learn how to improve the metrics on which their bonuses were based.
The Solution: Through our Stratactics Game (a game designed to teach business skills such as how innovation happens and how to think outside the box) we helped the group understand their company’s niche and how their market has changed since the company was established. This helped people better understand the new owners’ strategic objectives and how the employees play a role in achieving them. Next, using our Process Map activity, we broke down all of the costs involved in creating their products (using smaller numbers to show how every $100 is spent in the production and selling process). This helped illustrate the most expensive production costs – areas these employees control. The team discovered that $68 of every $100 went into raw materials and packaging, which helped everyone realize the need to prevent all forms of waste. The group was then broken into teams to identify areas of cost savings and ways to improve production lines.
The Result: These activities helped everyone understand the connection between operations (i.e., their job) and finance (i.e., how it influences the bottom line), identify where most of their key costs are, and helped them focus on saving in areas of high cost. The company ended up investing in highly sophisticated production line feeders to help reduce waste. This combined with the new financial focus saved the company over $5 million in the first year.